Korbi v Poljak [2003] NSWSC 671

New South Wales Supreme Court

CITATION : Korbi v Poljak [2003] NSWSC 671 HEARING DATE(S) : 27/05/03 JUDGMENT DATE : 29 July 2003 JURISDICTION: Equity Division JUDGMENT OF : Master Macready at 1 DECISION :

CATCHWORDS : Family Provision. Application by blind daughter in respect of an estate where the only asset, a house, was held for her elderly brother for life and thereafter for the plaintiff and her siblings. Brother contributed more to the estate than the plaintiff. Claim dismissed. PARTIES : Maria Korbi v Anna Poljak FILE NUMBER(S) : SC 4405 of 2000 COUNSEL : Mr G. Rundle for plaintiff Mr D.B. McGovern SC with M.K. Meek for defendant SOLICITORS : Warren McKeon Dickson for plaintiff Giles Payne & Co for defendant

- 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Master Macready

Tuesday 29 July 2003

4405/00 Maria Korbi v Anna Poljak JUDGMENT 1 Master: This is the hearing of a claim under the Family Provision Act 1982 in respect of the estate of the Late Duro Gajdos who died on 9 March 1994. His two daughters and his two sons survived the deceased. His wife had predeceased him. The plaintiff is one of the deceased's daughters and the defendant is another daughter who was appointed executrix of the deceased's last will. The will of the deceased 2 The deceased made his last will on the second of June 1992. Under that will the deceased left his home at 21 General Holmes Drive, Brighton-le-Sands to the executrix to hold it to permit his son George Gajdos to reside therein for life with a power of substitution of the residence. On the death of George the property is to pass to such of the deceased's children other than George who should survive the deceased. The plaintiff thus has already a one third interest in remainder in the property. There was a provision for substitution of grandchildren of the deceased in this bequest. The residue of the estate was to be applied in payment of testamentary expenses and then to be shared between all the deceased's children equally. The estate of the deceased 3 At the date of his death the deceased owned the property at 21 General Holmes Drive, Brighton-le-Sands, then valued for probate at $275,000, which was unencumbered. His only other assets appear to be moneys in bank accounts amounting to $6582.51 and some furniture of negligible value. These funds were used to pay administration expenses. As time progressed there was insufficient moneys in the estate to meet the ongoing expenses of maintaining the property which under the terms of the will fell upon the defendant. In 1994 the defendant came to an agreement with her brother George that he would pay all the expenses in relation to the property and this has enabled its retention. 4 The property at 21 General Holmes Drive, Brighton-le-Sands is currently valued at $590,000. The value of the life estate held by George at 1 September 2002 was $137,215. 5 The plaintiff's costs in respect of these proceedings on the basis of a 2-day hearing are estimated at $55,000 to $60,000. Her daughter Maryanne who has advanced some $10,000 to $15,000 on account of her mother's costs has in part funded the plaintiff. The defendant's costs are estimated at $70,000 for a 2-day hearing. The defendant has herself paid a substantial part of these costs and does not propose to take any action in respect of their recovery from the estate until after the death of her brother George who is aged 70 and who has inhabited the property by himself since the death of the deceased. In final submissions the defendant indicated that in the event that the plaintiff's claim was dismissed no order for costs would be sought against the plaintiff. This compassionate offer is no doubt motivated by the desire of the defendant not to see her sister ejected from her house in order to meet such a costs order. Family history 6 The first son of the deceased namely George Gajdos was born on 12 June 1934. He is now 70 years of age. The defendant was born in 1940 and the deceased's son John was born in 1946. The youngest daughter Maria, the plaintiff was born on 15 November 1949 and she is now 53 years old. 7 The family of the deceased, his wife and children was originally located in Serbia and in 1958 the family moved to Croatia. In 1964 the family moved to Germany where they resided until 1965. Between 1965 and 1968 the family moved to Australia in various stages. The first to come were John, Anna and her husband. When the deceased's wife came together with the plaintiff they stayed in Anna's house for a period of some nine months. 8 The plaintiff married on 7 July 1969 to Liman Korbi. At that stage the family purchased a property at 21 General Holmes Drive, Brighton-le-Sands. The house was purchased, as to a one-third share by the deceased and his wife, as to a one-third share by the brother John and as to the remaining one-third share by the brother George. The purchase price was $12,000 and funds to enable the purchase of $7,500 were borrowed. Both brothers and their parents contributed to the repayment of the mortgage. As well they all contributed to the $4,500 paid on completion. 9 On the acquisition of the house both the plaintiff, her husband and her parents moved into occupation. The plaintiff and her husband with their children lived there for many years. The plaintiff's first son Sammy was born on 12 April 1970 and her daughter Maryanne was born on 7 September 1971. 10 In 1972 the mortgages on the property at 21 General Holmes Drive were discharged. At that stage George transferred his one-third interest to his parents. The consideration was shown as $2500. There is some conflicting evidence as to whether or not any amount was paid. John also transferred his one-third interest to his parents at this time. He was paid some $4,000-$5,000 and used the funds to buy a house at Chapel Street, Rockdale. The plaintiff suggested that George was also paid $4,000 to $5,000 from his parents at that time. George denies this and the defendant did not hear of this from her parents. As George remained at home for most of the relevant time and did not need to purchase a home I will accept his evidence that nothing was paid to him for this transfer. 11 The plaintiff had for some time suffered with problems with her sight as a result of a failed cataract operation and secondary glaucoma. She first started to receive a pension to compensate for this in 1974. Her second son Dean was born on 9 May 1975. In this year the plaintiff's parents borrowed $11,000 from the plaintiff and her husband to fund the construction of a granny flat at the back of the property at 21 General Holmes Drive. The plaintiff's second daughter Vera was born on 27 April 1979. 12 In May 1979 both parents made wills in favour of each other with default provisions giving George the right to live in the premises for life. In this year the plaintiff and her husband purchased a property at 107 General Holmes Drive. The purchase price with legal expenses was $75,000. The parents of the plaintiff provided $25,000. The Plaintiff suggested that only $15,000 of this was a loan and the balance was a gift. However there is a receipt signed by the plaintiff on 31 July 1979 in which she acknowledges that she had borrowed $25,000. It is clear that the plaintiff and her husband paid back $5,000 two years later. Whether the balance was a loan or gift is not important. The plaintiff provided her parents with $11,000 and they provided her with $20,000. The plaintiff also borrowed $10,000 from her sister, Anna, to complete the purchase but this was paid back a year or two later after she sold land at Nowra. 13 In 1980 the plaintiff became totally blind. Her third son Tony was born on 15 June 1980. 14 The Plaintiff's mother died on 1 March 1991. Shortly thereafter the plaintiff made some allegations of improper conduct against her brother George. This had the obvious result of estranging the plaintiff and her brother. 15 As I have indicated the deceased made his last will on 2 June 1992 and he died on 9 March 1994. On 5 August 1993 the plaintiff's husband had died leaving the plaintiff with five children then aged from 13 to 23 years. Probate of the deceased's will was granted on 19 October 1994 and on 7 December 1994 the house was transmitted into the defendant's name as executrix. 16 The plaintiff alleges that she first learnt of the terms of her fathers will in early 2000 and she consulted a solicitor in February of that year. The summons was filed on 31 October 2000, which was approximately five years outside the time within which the application had to be filed under the act. Extension of time 17 Because the application is out of time it is necessary for the court to consider section 16 of the Family Provision Act, which allows an application to be made notwithstanding it, is out of time. There are a number of cases that refer to the principles to be applied in an application for an extension of time. In Re Guskett (deceased) (1947) VLR 211 the following was said: "It is necessary for the applicant to make out a case that will justify the grant of the indulgence sought. He is to show reasons why his failure to apply within the time allowed should be excused. Every case will have to be dealt with on its own facts but it would seem necessary for the applicant to satisfy the court that the circumstances are such as to make it unjust for him to be penalised for being out of time. As moreover he is seeking an indulgence he should apply promptly for an extension of time." 18 His Honour Young J in several cases has dealt with the principles governing application to extend time under this Act. In Massie v Laundy (unreported NSWSC, 7 February 1986) he indicated that when looking at 'sufficient cause" under 16(3) of the Act the factors which one looks at include the following:- (a) Is the reason for making a late claim sufficient? (b) Will the beneficiaries under the will be unacceptably prejudiced if the time were extended? (c) Has there been any unconscionable conduct on either side which would enter into the equation? 19 Apparently he also accepts a view, which was expressed by his Honour Needham J in Fancett v Ware (unreported NSWSC 3 June 1986) that there is no purpose in extending the time with respect to a claim that must fail. In Phillips v Quinton (unreported NSWSC 31 March 1988) Powell J when considering the matter at the substantive hearing leant to the view that a plaintiff seeking an extension of time under the Testators Family Maintenance Act must now demonstrate not merely a reasonable prospect but at least a strong probability of obtaining substantive relief. That view was not accepted by his Honour Hodgson J in Basto v Basto (unreported NSWSC 8 September 1989). 20 In De Winter v Johnstone, a decision of the Court of Appeal on 23 August 1995 his Honour Powell J referred to this matter and in particular the fact that nowadays the application for extension of time is invariably dealt with at the time of the application for substantive relief. He said at page 23: "In such a case, so it seems to me no extension of time ought to be granted unless it be established (inter alia) that the applicant for an extension of time would, in the event of that extension being granted, be entitled to an order for substantive relief." 21 His Honour Mr Justice Sheller considered that it was only necessary to show that the application was not bound to fail. His Honour Mr Justice Cole seems to have adopted the parties' approach of looking at the strength of the plaintiff's case. 22 The case of De Winter v Johnstone is also useful in that Sheller J commented on the meaning of "unconscionable". He was dealing with an appeal from Master McLaughlin and he referred to the Master's comments to the following effect:- "Unconscionable conduct in this context of course relates to such matters as whether the plaintiff has made an informed decision not to make a claim against the estate and has then decided after the limitation period has expired to make such a claim on account of some change in her financial and material circumstances which has occurred after the expiry of the limitation period." 23 With regard to the Master's comments, His Honour observed: "…with all respect I would not have thought this to have been unconscionable conduct. No doubt it depends on the circumstances. However the concept of unconscionable conduct is to be directed towards a deliberate holding off designed to lull beneficiaries into false sense of security. There is nothing to suggest anything of that sort in the present case."